General Subjects

Thoughts on Automobile Marketing

Michael Newlon

When I was going to college back in the Dark Ages, “Marketing” was one of my core study areas as a Business Management major. Back then, and I have no idea what they’re teaching now, Marketing consisted of five related but distinct business activities. They were:

• Sales

• Advertising

• Market Research

• Product Management

• Brand Management

Within these legitimate business functions, a few giants have made their mark on the American automobile industry and, in turn, American culture.

The origins of American “Muscle Cars” are cloudy, because so many automotive things were happening in the 1940s and early 1950s, but evidence of something quite new can be found.

Some believe the 1949 Oldsmobile 88 started it all with a “Rocket V-8” engine installed in the base model Oldsmobile chassis it shared with Chevrolet. In the days when the best Ford could do was the valve-in-head “Flathead” V-8 design from 1932, that big overhead-valve Oldsmobile engine in the light Olds/Chevy body was like something from outer space.

Others feel Chrysler’s Virgil Exner got it all started in 1955 with the “Letter series” 300 models. Chrysler’s stodgy post-war image was now a thing of the past. Exner’s designs would be industry leaders for the next decade. About this time, some Chrysler cars had the first factory engines to produce 1 horsepower per cubic inch of engine displacement. The powerful and beautifully designed (and engineered) Chrysler, DeSoto, Dodge and Plymouth products made quite an impression at the time. Many consider the ’55 to ’65 Chrysler products classics today.

Having survived previous ownership of a 340 hp 1962 Corvette Roadster, Zora Arkus-Duntov also comes to mind. Duntov was a Product Engineer who made his mark by coming up with the concept of the Chevrolet Corvette. He did his work under the “Product Management” segment of Marketing. He believed there were potential buyers who preferred a high performance American sports car, rather than one of those strange foreign types with funny names (Porsche 912?) that required a different set of socket wrenches, and gave the American car enthusiast market exactly what it wanted.

Another Marketing type who made his mark in the “Muscle Car” era was John DeLorean. Most in our younger generation probably associates him with the car, a Hollywood studio-modified DeLorean sports car, in the “Back to The Future” movie series. The DeLorean was, in its own way, revolutionary in design, but it was not what DeLorean had in mind with his original concept for a high-performance car.

John DeLorean made his major mark on the automotive world, and pop culture, when he was a Product Manager in the Pontiac Division of General Motors back in the ‘50s and ‘60s.

DeLorean started with an otherwise plain and unassuming (remember the 1949 Oldsmobile?) Pontiac Tempest two-door sedan, shoe-horned a high performance 389 cubic inch V-8 under the hood, mated the engine to a close-ratio 4-speed manual transmission, beefed up the chassis and suspension and the result was the legendary Pontiac GTO.

Tens of thousands of GTOs were sold all over the world. While John DeLorean didn’t invent the “Muscle Car”, he came very close to perfecting the concept. Go shopping for a 1964 GTO today and you’ll see what I mean.

Also in the early ‘60s at Ford, the Ford Division’s young General Manager, a former Ford Product Manager, had his own ideas. Under his visionary leadership, Ford quickly (about 18 months) rolled out a new model that was light, “sporty”, fun to drive and economical (about 80% of the parts were from Ford’s Falcon and Fairlane) to build. Enter Lee Iacocca’s Ford Mustang in April of 1964 and, like Duntov’s Corvette, you can still buy a new one today.

All this happened many years ago. But the work of innovative automotive Product Engineering and Marketing types like Duntov, Exner, DeLorean and Iacocca has left their mark on America’s ongoing love affair with high performance automobiles.

If you are fortunate enough to own one of their creations, I suggest you enjoy it on a regular basis, take very good care of it and hold on to it.

U.S. National Energy Policy? - Part 3

Michael Newlon

In the two earlier installments of this trilogy, I suggested we adopt a single grade of automotive gasoline for automobiles and light trucks.

For clarity, I suggest we classify “automobiles and light trucks” as passenger or commercial vehicles with a Gross Vehicle Weight Restriction (GVWR) of 10,000 pounds or less.

But there are a lot more vehicles on our streets and highways than cars and light trucks.

We have large (GVWR 80,000 pounds) tractor/trailer combinations, busses, vans, delivery trucks, fire trucks, tow trucks, stationary equipment (generators, pumps, etc.), and so on. Off the road there are diesel powered railroad locomotives of various types and sizes. They all require fuel of some type and all run on internal combustion engines of various types and sizes.

What about airplanes? There are big ones and small ones powered by one or more internal combustion reciprocating (piston) engines and jet (gas turbine) engines in a multitude of shapes and sizes.

Wow. This is getting complicated! Perhaps it might be easier to show, and hopefully simplify, all this information on a table?

alt

It won’t happen overnight, but I think a worthy goal contained in an overall National Energy Policy should be, to the maximum extent possible, to minimize the different types of fuels we need for various mobile and stationery power applications.

It is logical to assume that Pareto’s Law (the “80-20 Rule”) would apply here, since 80% of the fuel consumption will be made by 20% of the possible users of that particular type of fuel.

Outside the very broad categories on the table above, would be such things as automotive nitro-methane, automotive alcohol and high Octane leaded racing fuels, heavy “bunker” oil for large marine engines, specialty fuels (JP-5, JP-6, etc.) military gas turbine fuels, and so on.

According to the Pareto principle, these and other specialty fuel consumers might constitute about 80% of the user categories, but represent only about 20% (or much less) of the actual fuel volume consumed.

Many years ago, when electricity was being developed as an industrial and consumer product, a great technological argument raged, with powerful proponents on each side.

Some, led by Thomas A. Edison, the inventor of the light bulb and many other things, felt Direct Current (DC) technology should be the standard for our nation and the world. Others, led by Nikola Tesla, believed with equal fervor that Alternating Current (AC) was the preferred form of electrical energy for commercial purposes. Tesla won the argument and the rest is history.

A similar situation exists with something as large and as important as a National Energy Policy for the United States in the 21st Century.

Fossil fuels are not the only part of if, but they are and will likely remain a huge part of it. Just like the years-long arguments between Edison and Tesla over electricity, what we ultimately do as a nation with fossil fuels remains to be seen. But the sooner we resolve how our nation is going to deal with our total energy situation, including what we use to power our cars, trucks, airplanes, and other transportation equipment, the better off we, and the rest of the world, will be.

If you have not already developed and shared your thoughts on this subject with your two U.S. Senators and one Member of Congress of Congress, I suggest you do so.

If you send your letter promptly, you just might get an incomprehensible written response you can put in your pocket or purse for when you vote this November.

U.S. National Energy Policy? - Part 2

Michael Newlon

Recalling information presented in Part 1 of this trilogy on our U.S. National Energy Policy, we experienced our first modern Arab Oil Embargo from June to September of 1967. We experienced a second Arab Oil Embargo from October of 1973 to March of 1974.

Since then we have been subject to world oil market manipulation by an international oil cartel called the Organization of Petroleum Exporting Countries – OPEC.

The day before I began writing this missive, I paid $4.35 per gallon for 87 Octane unleaded regular fuel. 89 and 91 Octane grades were about $4.45 and $4.55 per gallon, respectively.

Why do we have three grades of gasoline? Apparently someone other than “free market forces” decided some years ago that we needed 3 grades of unleaded gasoline and, since we still have three grades of unleaded gasoline, it looks like they got away with it.

So now, in addition to my having a choice of two other grades of gasoline that I don’t need in my car, gas stations all across the country must have not one but, in most cases, three underground tanks to store the 3 different grades of gasoline.

The gas station’s gasoline supplier must have a fuel tanker trailer for each grade of gasoline so one grade does not contaminate the other two. So, instead of having one tanker trailer, the supplier must have three different trailers, or make some other arrangement to achieve that equivalency, to carry all three grades of automobile fuel to the gas stations they supply.

Go further back in the supply chain to the refinery. There are processing costs associated with refining the three grades of gasoline.

Refinery processes being what they are, let’s stipulate that it’s easier and more efficient (less costly) for the refinery to produce a single grade of unleaded fuel than three different grades of unleaded automobile fuel.

45 years after the 1967 Arab Oil Embargo, I am amazed that we have not converted to a single grade of automotive gasoline, and developed compatible standards so automobile manufacturers can design and build automobiles and light trucks that run on this single grade of fuel for optimum engine performance.

I know of no compelling reason, other than current government Regulations to the contrary, that free market forces and some common sense cannot:

1. Encourage all U.S. gasoline refiners to produce a single grade of unleaded automotive fuel and

2. Encourage all automobile and light truck manufacturers to produce vehicles that will perform satisfactorily on that single grade of automobile gasoline.

But wait. There’s more!

Did you know that, in many parts of the U.S., there are “summer blend” and “winter blend” gasolines? Well, there are.

So we can take everything presented above about the costs of having three current grades of unleaded automobile fuels and multiply that by two blends of unleaded automobile fuels in certain parts of the U.S. Now some (but not all) refineries must produce not three but six fuel blends per year.

Tanker trailers must carry those six fuel blends to many gas stations and gas station owners must have storage tanks capable of keeping not only the three grades of gasoline from contaminating one another but the two blends of the three grades of gasoline from contaminating one another.

All of this regulatory mirth and merriment comes at a price, and that price is paid either directly or indirectly by the American consumer because we don’t have a rational National Energy Policy.

This final point was presented in Part 1 of this Article trilogy, and this writer believes it’s important enough to repeat here:

If you have not already developed and shared your thoughts on this subject with your two U.S. Senators and one Member of Congress of Congress, I suggest you do so.

If you send your letter promptly, you just might get an incomprehensible written response you can put in your pocket or purse for when you vote this November.

More Articles...